The Cabinet will discuss today (April 20) whether to approve the liquefied natural gas (LNG) projects proposed by the AES Corporation and Tractebel, sources have told The Tribune, with one economist questioning whether the Bahamas is ready to derive the maximum possible benefits from such facilities being based in this nation.
In a paper sent to The Tribune, Dr Gilbert Morris, head of the Landfall Centre, said that if the Bahamas was to approve any of the LNG projects, it should ensure the expertise to develop such facilities elsewhere is passed on to Bahamians, with further gains made in the areas of scientific education and international commercial contacts for the Government.
It is unclear whether today’s Cabinet meeting will approve either the AES or Tractebel proposals, although the pressure on the Government to reach a swift decision increased last week after the Florida state administration, headed by President George W. Bush’s brother, Jeb, issued the necessary permits for both companies.
Already possessing the necessary US federal permits, AES and Tractebel now only require approval from the Bahamian government for their projects to go ahead. AES has been slightly further advanced in terms of the approval process than Tractebel, having completed its $4 million environmental impact assessment (EIA) last year. The Bahamas Environment, Science and Technology Commission (BEST) is understood to have submitted further questions on its EIA to Tractebel, whose project has received firm backing from the Grand Bahama Port Authority, in the last two weeks. Sources have told The Tribune that at least one -and quite possibly two – of the AES and Tractebel projects is likely to receive the go-ahead from the Government. Once approval has been given, both companies will have to develop an approved environmental management plan and sign a Heads of Agreement.
Arguably the main beneficiary if either project is approved will be the Public Treasury, which is likely to gain at least $20 million from each of AES and Tractebel. The Government will earn revenue from issuing a licence to the companies, leasing the land, and a throughput fee, which is likely to be linked to the market price for LNG.
In his paper, Dr Morris said the $600 million values that had been attached to the AES and Tractebel projects referred to the costs of constructing the LNG terminal and pipeline. Focusing specifically on the Tractebel project, he explained this valuation did not apply to the jobs created or extra spending that could be enjoyed by the retail sector of Grand Bahama.
He wrote: “That amount will be closer to $6-$8 million, with a bump upwards during the construction phase and notwithstanding any lump sums paid to the Bahamas government or to the Grand Bahama Port Authority. “The profitability to the companies from sales in Florida hangs on a number of ‘dependent variables’ too numerous to explain here. However, the further expansion of sub-urban South Florida could mean that this investment could not have been made at a better time ensuring to some extent a sustainable demand for LNG and energy services and products for some time to come.
“Without explaining fully therefore, the 40 or so jobs from the LNG facility will be reasonably secure, and will likely create or sustain -according to the usual multipliers – approximately 180 additional jobs in Grand Bahama. As such, to put it bluntly, there will be a significant economic impact from this investment.”
When it came to employing the revenues generated by the LNG projects, Dr Morris said: “May it not be an interesting departure from the usual to take $10 million of that $20-30 million and, in conjunction with the College of the Bahamas, establish a world class research and engineering facility?
“Tractebel has a facility in Boston, and so may have leverage in attracting Harvard’s School of Engineering as a partner or MIT or The University of Massachusetts; El Paso may be able to bring University of Texas, or Rice University; AES may be able to bring University of Virginia or Virginia Tech in such an arrangement.
“Each of the companies will have access to advanced research institutions that would lend credibility to a Bahamas body.” He added: “The idea is that such partnerships would benefit the companies, since they must have a training facility in any event.
It would advance the provision of scientific education in the Bahamas, and may lead to new commercial developments, as students from around the world may choose to study where they can get ‘hands on’ experience.
Everybody wins.
“These initiatives laid out above means that whichever company wins the project will not sit on its laurels. An interested examination will reveal that in many places where they invest they take an interest in local charities, and support social development of various kinds.
“Lastly, the main considerations for the investment in the Bahamas is the safety and environmental issues, and which of the companies has the best, most comprehensive capacity to meet or exceed the relevant requirements through responsible stewardship.
“Additionally, regard must be had for which company will commit to the Bahamas in the most meaningful way, and whether that commitment brings with it international contacts and connections, which advance the reach of the Bahamian government in international commercial affairs, open up opportunities for the development of critical skills and expertise for Bahamians, and brings the added value of community involvement that enriches the national social life.”
Neil Hartnell, The Tribune
April 20, 2004
